Save AIG, Fannie and Freddie Shareholders!

Despite a handful of reasons that could be offered to completely wipe out the shares of American International Group ( AIG), Fannie Mae ( FNM) and Freddie Mac ( FRE), there's a laundry list of arguments to keep all three stocks trading.

It may be hard to accept the idea that shareholders -- many of them hedge funds -- could be "saved" at this point after all three companies are essentially under the conservatorship of the U.S. government. Shares of all three companies have plummeted 97% over the last 12 months, and all three had traded close to or below $1 a share. So wiping out another $1 per share is really nothing compared to the pain shareholders have already endured.

Another point in favor of eliminating the common stock of all three companies is that the market capitalization of each has dwindled considerably. What does remain is a tiny fraction of the total amount of money the U.S. government has poured into each company.

For instance, AIG is in debt to the government by a whopping $173 billion, according to the latest tally, but it has a market cap of less than $4 billion. As an investor, the U.S. has committed $1.5 trillion to Fannie Mae and Freddie Mac. While it has only spent $358 billion thus far, that figure dwarfs Fannie's market cap of $1 billion and Freddie's market cap of just $641 million.

The government is trying to ameliorate the effects of another Lehman Brothers, and that leaves the U.S. with another half-in, half-out situation where you have a zombie institution that is neither completely free nor completely nationalized, much like Citigroup ( C).